If Unskilled Labor Is Relatively Plentiful and Cheap in Many

question 419

Multiple Choice

If unskilled labor is relatively plentiful and cheap in many foreign countries, then as the United States expands its trade with these foreign countries, the domestic demand for

• A)both skilled and unskilled labor will rise proportionately.
• B)skilled labor will fall and the demand for unskilled labor will rise.
• C)skilled labor will rise and the demand for unskilled labor will fall.
• D)both skilled and unskilled labor will be unaffected, assuming no barriers to free trade.

---

Definitions:

Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its separable net assets.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to run its operations.

Long-Term Debt

Financial obligations of a company that are due more than one year in the future.

Incremental Value

The additional value that is gained from making an investment or conducting a project, compared to doing nothing.